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The Federal Communications Commission on Monday gave Verizon permission to offer long-distance telephone service in Massachusetts, marking the second time the “Baby Bell” has been approved for long-distance services and another blow to major carriers like AT&T and Sprint. The FCC’s decision that Verizon had met the requirements of the 1996 Telecommunications Act was the fifth time the agency has approved a Baby Bell for long-distance services in the past two years. The Baby Bells, created during the breakup of AT&T in 1984, are SBC, Verizon, BellSouth and Qwest. For the first time, however, the FCC approval was not unanimous. Monday’s decision might signal that the agency — now under Republican control — is easing its standards for Bell long-distance entry. Commissioner Gloria Tristani, a Democrat, parted company with Chairman Michael Powell, a Republican, and two other commissioners by voting against the Verizon bid. The easing trend could become even more pronounced when the Senate approves three pending nominations to the agency made by President George W. Bush. If approved, those nominees will give Powell a working Republican majority, as opposed to the current 2-2 split. It will be the first time in more than a decade that the agency has a Republican majority. Analysts said Powell is already making his mark on the FCC, which oversees the telecommunications industry. “It’s the same law, but obviously the new chairman has made it clear that he doesn’t expect perfection here,” says analyst Paul Glenchur of the Schwab Washington Research Group. Long-distance approvals likely will come more swiftly than in the past, he says. Consumer groups reacted even more strongly, charging that Powell had effectively shut off competition in local phone markets. “Allowing Verizon to sell long-distance service before it has opened its monopoly service areas to alternative local service providers snuffs out any hope that a vigorously competitive telephone market will develop,” said Mark Cooper, director of research for the Consumer Federation of America. Verizon had “not even come close” to meeting the standards set by the FCC in prior long-distance approvals, he added. Both Powell and Verizon disagreed with those assessments. “There is more competition on a percentage basis in Massachusetts now than there was in New York or Texas when Verizon’s and SBC’s long-distance applications were filed for those states,” said Tom Tauke, a senior VP at the company. Powell said the FCC’s analysis showed that Verizon had met the requirements of the Telecom Act. And he warned future applicants not to expect an easier ride. “The Commission will continue to apply the same rigor it always has to these questions,” Powell said. Under the 1996 law, the Baby Bells cannot offer long-distance service to customers within their local regions until they open their dominant local networks to competitors. The law’s 13-point checklist of requirements was intended to spur competition by giving the Bells a powerful incentive — long-distance entry — to share their wires with competing carriers. Since 1996, with the FCC run by Democrats Reed Hundt and William Kennard, the agency has held a tough line, rejecting five Bell applications while approving four. Massachusetts provided the first tangible evidence of Republican Powell’s approach. The approval came despite uncontested evidence that Verizon was charging competitors far more than the law allowed for access to its central office switching services. Verizon responded that it would lower the switching rates to the level it charges in New York. The FCC approved those rates back in 1999 when it allowed Verizon to enter the New York long-distance market. In her dissent, Tristani blasted the FCC for going along with that approach. “The majority has sent a signal that it will allow reliance on previously approved rates, irrespective of the amount of time passed or pricing information gathered since those rates were last before us,” Tristani said. “In a declining cost industry characterized by rapid technological innovation, such an approach is inconsistent with our statutory mandate.” Copyright � 2001 The Industry Standard

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